Principles for Responsible Investment
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PRI: Paris Agreement COP24 update
COP24 key themes
- The Paris Agreement Work Program (PAWP): to finalise ‘The Paris Rulebook’ for implementation of the Paris Agreement and, reflect on collective ambition and how to close the emissions gap over the coming two years, namely through the submission of revised NDCs in 2020.
- The IPCC 1.5°report will frame much of the discussion, emphasising the urgency for governments to step up climate action.
- Just transition:to ensure that the low-carbon transition secures a decent future for affected communities.
- Financing the low-carbon transition:addressing the US$ 100bn funding for developing countries.
COP24: what’s the PRI doing?
- The PRI will participate in COP24 to urge governments to step up ambition towards 1.5C, highlight investor support for just transition and outline what is needed to scale up low-carbon investment from a global investor perspective.
- Just transition: At COP24, the PRI will launch a new guide for investors, Climate change and the just transition: a guide for investor action, as well as an investor statement on the just transition. The PRI sees investors’ key action areas for investors as: investment strategy, corporate engagement, capital allocation, policy advocacy and partnerships, learning and review.
- Finance: the PRI will participate in high-level dialogues on the Paris Agreement and finance, focusing on how low carbon investment can be mobilised.
- 1.5C and the need for ambition: PRI will highlight the prospect of climate disruption and a forceful policy response, including our thought leadership paper, The inevitable policy response: act now
Focus for governments
1. The COP decision
To demonstrate a commitment to stepping up climate action, parties should include the following core elements in the final COP decision at Katowice:
- Respond directly to recent reports and developments. This includes the IPCC report on 1.5°C; the outcomes of the Talanoa Dialogue; and the upcoming 2019 UN Secretary General Climate Summit, where parties can announce their enhanced NDCs.
- Recommit to the Paris Agreement’s ‘ambition mechanism’ by re-affirming the process for countries to review and revise their NDCs by 2020. Calling on parties to reflect on their level of ambition in 2019, with a goal of communicating a more ambitious NDC by 2020. The decision should also request that parties communicate long-term low-carbon strategies, ensuring that revised NDCs align with 2050 plans for decarbonisation.
Establishing the Paris Rulebook
- The Paris Rulebook will set out the tools and processes to enable full, fair and effective implementation of the Paris Agreement.
- It will provide guidance on how countries should implement and strengthen their NDCs under the Paris Agreement, whilst allowing the international community to hold countries accountable for their commitments.
- It will also address how to track and mobilise finance and support for developing countries.
- Countries will develop and communicate their NDCs, reporting on their efforts and progress to the international community.
- Every five years the international community will comprehensively take stock of collective progress towards the Paris Agreement’s long-term goals (‘ambition mechanism’).
- Negotiators at COP24 will debate on topics that address the different elements of the ambition mechanism (Planning; Implementation; Review). These topics will include:
Common Timeframes: currently initial NDCs have different implementation periods, ending in 2025 or 2030. Countries are debating whether all Parties should communicate NDCs with a common implementation period.
Information on Mitigation Action: what countries should communicate in their NDCs to provide clarity, transparency and understanding (CTU) of their efforts to reduce emissions.
Accounting of Mitigation Action: involves crafting guidelines for countries to define, assess and quantify the mitigation targets and other commitments in the NDCs and the progress being made to achieve them.
Predictable Financial Information: developed countries are required to communicate every two years information on finance to be provided and mobilised. Negotiators will debate what information is required.
Adaptation Communications: under the Paris Agreement, countries should provide an adaptation communication, including their priorities, plans and actions, and implementation and support needs. Negotiations must address what information countries should provide and how they should communicate it.
2. Presidential call to action from the Talanoa Dialogue
Over the past year, civil society groups, businesses, cities and states have collaborated to address three questions: where we are, where do we want to go and how do we get there? The dialogue will officially conclude at COP24 with government ministers and CEOs from business and civil society responding to that final question. Such a call to action should be in addition to a more detailed technical summary compiled by the secretariat of the UNFCCC.
3. Enabling conditions: finance
- Adequate and accessible finance is a pre-condition to enable all countries to go further, faster together.
- Many developing countries need support to make their contribution towards the goals of the Paris Agreement.
- The Convention and the Paris Agreement clearly establish the obligation for developed countries to provide support for developing countries: technology, finance and capacity building.
- COP24 will consider the third Biennial Assessment report containing a global overview of private and public climate finance flows. It will assess the implications of these flows, their composition, purpose and emergent trends relevant to the UNFCCC and Paris Agreement goals.
- Clear progress towards raising the USD 100bn will be a much-needed positive political signal.
The Polish presidency
The Polish presidency plans to focus its message on three key themes:
- Technology - development of climate-friendly modern solutions, such as electromobility;
- Man - just transition of industrial regions;
- Nature - supporting achieving climate neutrality by absorbing CO2 by forests and land, or by water management.
- Maintain the global character of the Paris Agreement, depending on the specific conditions i.e. raw materials and geography (using own natural resources).
- Efforts must be tailored to the capabilities of the individual countries. They should ensure a balance in commitments between states in different conditions and at different stages of development.
- Poland would like to show other countries how climate neutrality can be reached by using innovation and a technique for CO2 sequestration by soils and forests (the project “Forest Carbon Farms”).
- Forests occupy almost one third of Poland’s territory and therefore Poland can achieve climate neutrality envisaged in the Paris Agreement, i.e. balancing the emission level with the quantity of CO2 absorbed by forests.
- Showcase its Responsible Development Strategy - Poland has developed a series of regulations such as popularizing low- and zero-emission vehicles.
- Cleaner Coal – the Polish government encourages favourable conditions for a profitable and modern coal mining sector, using coal technologies such as coal gasification, tested in Silesia.
- Silesia (or Śląskie Voivodship) was included in an EU initiative aimed at coal regions in a transformation period (Coal Regions in Transition). Among the projects submitted by Poland, are plans to create a pumped storage power plant in the liquidated Krupiński mine in Suszec or a project for hydrogen cells prepared by Jastrzębska Spółka Węglowa.
- The EU needs to end the use of unabated coal by 2030, to align with the ambitions of the Paris Agreement. Transitioning away from coal is proving a significant challenge in Poland as it provides half of the country’s energy mix, including 80% of electricity generation. Whilst Poland is starting to develop clean alternatives such as wind power, the shift to a greener economy would impact on communities built around mines.
- The Polish government, using the slogan ‘Poland stands on coal’, considers that coal is a strategic fuel, guaranteeing energy security; the governing party is supported by the coal industry and its trade unions - around 100,000 Polish jobs are estimated to be related to coal. The Confederation of Mining Trade Unions in Poland see EU and international climate action as a threat to their way of life and the union’s arguments hold sway with the ruling Law and Justice party.
- In 2011, the Polish government blocked EU plans to raise its goal for reducing carbon emissions and in 2018, it sued to try to avoid new EU pollution rules which could force the closure of many existing plants.
- The majority of coal power plants were built in the 1970s and are in need of modernisation; 10GW of new coal-fired power in Poland is scheduled to become operational before 2028 as part of a new wave of investment.
- The Silesia region (location of COP24) has benefited from funding by an EU initiative “Coal Regions in Transition”. However, the government’s list of proposed beneficiaries has been criticized for only containing state-owned fossil fuel companies.
What is a just transition?
Investors are increasingly committed to the low-carbon transition in terms of shareholder engagement, capital reallocation and policy dialogue. Much of the focus has been on getting investors to think about the environmental dimension, however, there is a need to fully incorporate a robust social dimension in terms of the positive and negative implications of the climate transition for workers and communities. This is the agenda of the “just transition”, which is included within the 2015 Paris Agreement on Climate Change as a critical factor to ensure that the transition is both fast and fair. The PRI is leading investor action on just transition, including new guidance and an investor statement on just transition. This will be a key focus area for PRI at COP24 and in 2019.
What is the PRI doing?
- We have teamed up with Harvard Kennedy School (US) and the Grantham Institute at LSE (UK) and the ITUC to look at the just transition from an investor perspective and come up with action plans for tackling the issues with investors playing their role.
- At COP24, PRI will launch a new guide for investors “Climate change and the just transition: A guide for investor action” as well as an investor statement investors can endorse to support clear action on this. This outlines 5 key areas of action for investors (Investment strategy, Corporate engagement, Capital allocation, Policy advocacy and partnerships, Learning and review).